Re: ...Reshape military benefits, add civilian programs
This would be a very smart thing to request...
Those 83% get nothing, and I am not really impressed with TriCare...
The remaining 17% receive benefits at the whim of future politicians honoring past promises...
I would welcome an automatic 5% going into TSP before the military member pays a cent. Then match it to 5%. For an E1 the initial government contribution would be 928/year. If the E1 contributes 5% the annual contribution would be $2,946. The E1 would contribute $982 of that - or about $41/pay period out of a gross check of $774/pay period. The total amount going into the 401(k) would be $122/pay period. This on a gross salary of $18,564.
If the Perpetual E1 is 19 years old and his salary goes up by the inflation COLA than here are the retirement numbers:
- Annual Starting Salary: $18,564
- Starting Balance: $0
- Average Inflation: 3%
- Contribution: 5% (resulting in an initial $2,946/year)
- Average Return: 8%
- Retirement Age: 65
- Ending Balance: $1,801,717
- Annual Income: ~$35,000
Folks, that ain't bad for our 46 year E1. When our E1 retires as an E1 he/she will be able to pull out twice his/her annual salary inflation adjusted. But, we know that someone 60 years old makes more than an E1. So, does this look like a good idea. Yup...
And, if the chap serves four years he can move almost $14K to his/her new employers 401(k) or his/her Traditional IRA. Actually, since he/she is still at a low income tax rate after four years these assets can get migrated to a Roth.
Finally, I am using an average return of just 5% over inflation. The S&P500 averages more than 7% over inflation. Our E1 will have to suffer on a bit more than $70K/year inflation adjusted if he sits in the 'C Fund'.
Lookin' up at the 'G Fund'!!!
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